Hedge funds have maintained their bearish stance on banking and financial stocks, continuing to place bets against these sectors during the week ending last Friday, according to a report by Reuters citing a note from Goldman Sachs' prime brokerage division.
The wagers come amid ongoing job cuts and a slowdown in dealmaking within the financial industry.
The note highlighted that financial stocks were the most net sold sector of the week. This marked the fourth consecutive week of net selling in banks, insurance companies, publicly traded property trusts, and capital markets firms – entities that facilitate the buying and selling of bonds and stocks.
Despite this selling trend, Europe's STOXX 600 banking index has risen 1.7% since August 26, and the Dow Jones banking index closed up over 2% for the week ahead of the U.S. holiday on Monday.
The Goldman Sachs note also revealed that financial stocks were sold in six out of the last seven weeks, with the selling pressure being global. North America led the way in notional terms, followed by developing markets in Asia and Europe.
Although the total value of global deals has increased by about 20%, the number of mergers and acquisitions deals has dropped by 25% for the year through 25 June, according to LSEG data.
Amidst this widespread selling, hedge funds engaged in modest net buying within the consumer finance sector, Goldman Sachs noted.
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